Organization is Key to Helping You Save Money

Many people pay their bills every month, contribute to their 401(k), and so on and never give much thought to whether their habits are costing them more money every year. As I mentioned in "10 Ways to Keep Your Personal Finances in Check," organization of your financial records is key to helping you save money.

My husband tosses all of his financial documents into a big Rubbermaid tote. It seems to work for him, but it causes me a lot of anxiety - especially at tax time when he hauls it into our CPA's office.

I tend to be much more organized than my husband, but every once in a while I slack off and suddenly find myself with a couple of months worth of bills (PAID, of course!), bank statements and uncashed checks in a messy stack on the corner of my desk. I cringe when faced with the task of going through the pile, but, afterward, I feel a lot better about knowing the state of my financial life.

Here are my suggestions for getting your finances ordered and, in the process, finding more ways to save money.

Make the Chore More Friendly

To avoid overwhelming yourself, it may be worthwhile to break down the chore of organizing your finances into smaller sub-tasks that you can schedule over a period of four-weeks. Here's what the schedule might look like:

Week One

Go through your bills and look for ways to save money by cutting expenses.

I did this earlier this year in preparation for a move. One thing that immediately stood out was the fact that we were paying for both landline and cellular phones. Why? When we moved into our current house, we opted not to get landline service, a decision that will save us about $540 per year.

Sometimes eliminating a service altogether isn't an option, but be sure to look at things like per-minute long distance rates, taxes and fees, additional charges for add-on services, etc. Check out websites such as trac.org or saveonphone.com, either of which may help you save money by finding other telephone service providers with better rates.

Also look for add-ons to your cable bill such as premium channels and services. Is there anything you can eliminate? Call your provider and see if you can negotiate lower rates. When I set up our cable/internet service at our current home, I was able to obtain a rate about $25 per month cheaper than at the old house, saving us $300 per year. Same exact service, same exact provider.

In the interest of saving money, you may need to hold family meetings to ensure that everyone is on the same page. For instance, if you can tell by looking at your electric bill that it has gone up significantly since your son developed an interest in girls and started showering twice per day, you probably need to have a discussion about it. The whole family needs to be involved in your efforts to save money.

melissss, flickr.com

Week Two

Review your checking account.

You'd be amazed at the money you can save by simply reviewing your bank statement. Look at your statements from the last three months and circle every fee. Figure out ways to eliminate these, such as getting cash back from purchases rather than using an ATM machine that charges a fee, or setting up direct deposit to eliminate monthly account service fees. Change banks if necessary to ensure that you are getting the services you need.

Review your mortgage.

The home mortgage is one of the most often overlooked opportunities to save money. Check out the mortgage calculators at sites like bankrate.com or eloan.com to see if refinancing your mortgage might be worthwhile. One great refinancing strategy: Get a new loan for the term remaining on your old loan at a lower interest rate to lower your monthly payments, thereby helping you to save money.

Week Three

Evaluate your debts.

With all the money you've saved from your activities in weeks one and two, you should be able to funnel another $100 or more toward debt repayment, potentially savings hundreds of dollars in interest expenses over time. While you're at it, look into obtaining credit cards with lower interest rates and 0% on balance transfers - these will also help you to save money while you payoff your balances.

Review your insurance needs.

My husband recently shopped for car insurance and found a policy with even better coverage than we had previously for $60 less for a six-month policy. Other ways to save money on car insurance include buying a policy for one year rather than a shorter term, or making one lump sum payment of your premium rather than monthly payments. Options vary from provider to provider, so be sure you are thorough in your research. Additionally, check out life insurance, homeowners insurance, and any other coverages you may need, and investigate the option of obtaining a multi-line discount to help you save money.

k9ine, flickr.com

Week Four

Reevaluate your retirement funds.

Now that you have founds ways to save money in previous weeks, it's time to determine whether you can redirect more of your income to your 401(k) or IRA. You also need to take this opportunity to make sure that your portfolio is well diversified. Take the time to do your research, or enlist the help of a reputable Certified Financial Planner (CFP).

Make a list of where your assets are hidden.

If something happened to you tomorrow, would your heirs be able to find all of your assets? Leave them a master list to include bank accounts, safe deposit boxes, investment accounts, insurance policy numbers, retirement accounts, deeds/mortgages, tax records, contact information for your CPA and attorney, the location of your will, etc., etc., etc. While you're at it, if you don't have a will, call a lawyer and make an appointment to have one prepared.

What a relief!

As you go through these steps, file papers that need to be kept in a system that ensures that a) you can keep up with it, and b) you can easily find what you need at a moment's notice.

Organizing your finances is truly time consuming and headache-inducing, but once your system is in place, it should be a huge relief - especially when you start to see all of the areas where you will save money. You may want to repeat the reviews of bills, insurances, retirement accounts, and so on once or twice per year to make sure that you are spending only what you need to spend and saving as much as possible.